eBay profits rise, outlook misses estimates

eBay posted healthy fourth quarter results on Wednesday but its decision not to raise its 2006 outlook led to a fall in its share price in after-hours trading.

The online auction site saw profits jump 36 percent year-over-year to $279.2m or $0.20 per diluted share during the fourth quarter. This compares with $205.4m or $0.15 a share, for the same fiscal quarter in 2004.

However, financial analysts expressed disappointment at eBay's decision not to increase its forecast for the new financial year with shares falling 2.5 per cent. The company's 2006 outlook of revenue growth of between $5.7bn and $5.9bn is lower than Wall Street estimates and investors are believed to be concerned as to whether the company's growth is beginning to mature. Net revenue rose 42 percent to $1.3bn in the fourth quarter while operating income increased 30 per cent year-over-year to $370.4m. The rise in net revenue can be attributed to growth in eBay's core markets in the US and Germany and higher-than-expected profits from Skype and shopping.com "Q4 capped off a remarkable year for eBay," said Meg Whitman, president and CEO of eBay, in a statement. "We saw accelerating growth and momentum across the board, a testament to the fact that eBay has built the most outstanding portfolio of businesses on the internet."

For the full year, eBay generated consolidated net revenues of $4.6bn, a 39 per cent increase over the $3.3bn recorded in 2004. Consolidated net income also increased 39 per cent year-over-year to $1.1bn, or $0.78 per diluted share.

The number of confirmed registered users the company has rose 33 per cent year-over-year to 180.6 million. This compares to 135.5 million users at the end of the fourth quarter 2004.

The number of active users who bid, bought, or listed an item within the previous 12-month period, grew to a record 71.8 million in the fourth quarter, a 28 per cent increase over the 56.1 million active users reported in the same period a year ago.

At the end of the fourth quarter, eBay hosted approximately 383,000 stores worldwide, with approximately 212,000 stores hosted on the US site. The company's payment processing arm PayPal, had 96.2 million total accounts by the end of the fourth quarter, a 51 per cent increase compared to the 63.8 million accounts a year earlier.